Abstract
This paper considers the relationship between healthcare expenditure (HCE) and gross domestic product using Baltagi and Li (Ann Econ Financ 3:103–116, 2002) semiparametric fixed effects regression estimator in a sample of 16 MENA countries over the 1995–2012 period. Findings indicate that income elasticity is not consistent but varies with income level and healthcare is a necessity for the non-oil rich countries (non-GCC) whereas it is an inferior good for the wealthiest countries in MENA; Qatar, United Arab Emirates (UAE) and Kuwait. Furthermore, it is found that the infant mortality rate per 1000 live births has a negative effect on per capita HCE in non-GCC countries and the proportion of the population age 65 and above is statistically significant in Bahrain, Oman and Saudi Arabia.
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